Solar farms and almost free market sale to seed more deed restrictions
By Mark Reaman
Crested Butte community development director Michael Yerman presented some out-of-the-box ideas to the Town Council Monday, November 5, as part of his proposed Five-Year Affordable Housing Plan. Council was generally on board with Yerman’s proposal.
The two most novel ideas included powering all the units to be built on Block 76 through a solar farm and not using any natural gas, and looking at starting a deed restriction purchase program in town that would essentially pay people to add a deed restriction to their current free-market unit.
The start-up funds for such a program would be raised by loosening deed restrictions on an affordable single-family lot in the Paradise Park area and selling it for a minimum $400,000, with the caveat that it be owner-occupied by a local in perpetuity.
“Town is doing a lot for affordable housing and you guys are killing it,” Yerman told the council at the Monday meeting as he went over past successes and current projects in the hopper. He said the goal was still to build an additional 93 units of housing in the next five to seven years. He said the recently implemented Vacation Rental Tax has been successful and is estimated to bring in at least $255,000 annually to the town affordable housing fund. He reminded the council that there would be two acres of land banked for affordable housing once the Slate River annexation is completed.
But it was the potential to construct a block of housing that would essentially be mostly off the grid that excited Yerman. The town would invest in energy offsets primarily through solar panels to offset energy use in the new units constructed on Block 76 by Rainbow Park. Yerman said roof forms on the actual homes would not be large enough to produce the needed energy, so his idea is to build a solar farm on the roof of the new wastewater treatment facility.
“A solar garden is doable at between $150,000 and $220,000,” Yerman said. “We could save $75,000 by not installing a gas line extension. The council has set aside $100,000 in next year’s budget for a ‘green’ or sustainable project and this could be that project. I still need to have a conversation with the Gunnison County Electric Association [GCEA] since the power would be electric. We still have a lot to look at but I’m excited and think it could work.
“The last thing I want is to do it just to have a warm and fuzzy thing that then costs residents $250 per month,” Yerman continued. “I want it to be able to really reduce their utility costs. It should be $100 per month. It would be really cool if it worked on Block 76.”
Yerman said this “pilot project,” if successful, could open the door to some other deed-restricted units that currently have high utility costs. It might even entice some property owners to adjust deed restrictions if they could tie into the solar farm.
Mayor Jim Schmidt said the county was using geothermal energy to heat the courthouse and that could be another option worth exploring. Yerman said he would look at numbers for other alternatives to see what could work.
“If this is something the council wants to do, we need to bust a move,” Yerman said. “We need to run the numbers. Time is of the essence.”
“Send it,” chimed in councilman Will Dujardin.
“I’d want some more details,” said councilman Jackson Petito.
“You need to have that GCEA conversation,” said Schmidt. “Electric can be expensive if getting it from offsets.”
“The buildings on Block 76 will be built energy-efficient,” said Yerman, “but we want to do it right and make sure utility costs will actually be low.”
Town manager Dara MacDonald said electricity generated from non-fossil fuel sources like solar is a good way to reduce carbon emissions.
“Can you get back to us with a good idea of the practicality by the end of January?” asked Schmidt.
“We’ll have to do it by then,” said Yerman. “We just need to be sure it works and people won’t be stuck with a $350 per month utility bill.”
Purchasing deed restrictions on existing units
Yerman explained to the council that the town of Vail had successfully implemented a deed restriction purchase program for free-market units.
MacDonald reported that Vail had purchased about 200 deed restrictions in nine months at about $65,000 each. “It seems like there is a lot of potential there,” she said. “We suggest taking a longer look at it.”
Yerman said the program could work in multiple ways to keep locals living in town. He explained that if local homeowners are having a difficult time making payments on their free-market units, they could arrange for the town to purchase a deed-restriction on the property. They would then receive a substantial payment that would make it easier for them to remain living in town.
That property would then be deed-restricted to keep it in the local pool in perpetuity.
Yerman said this arrangement could be very effective in the event of an economic downturn. He said such a deed restriction purchase was definitely less expensive than building new deed- restricted units.
Yerman’s idea to initially fund the project would be to take Lot 5 in Block 80 and sell it at a significant price by opening up the deed restriction to simply restrict ownership of the property to people who occupied a home on the lot as locals. There is only one water and sewer tap to the lot and to get more that would allow additional units on the site would cause some road and soil issues. That suggested deed restriction would go along with any sale. Yerman said the town could take sealed bids with a minimum of $400,000 for the lot that sits on the edge of the affordable housing area. The money from the lot sale would then be the seed money for the deed restriction purchase program.
Schmidt suggested selling the lot totally free market and getting twice the revenue from a sale. “It is the best lot over there,” he said.
“I want that home to be occupied by locals. We’d want the lights on and kids to get candy there when they go by on Halloween,” Yerman said.
Jim Starr suggested requiring an Accessory Dwelling Unit (ADU) to be built on the lot.
Yerman said he understood that idea but wanted to keep the property affordable for a local who lived in the valley. “Doing that could make the property very expensive,” he said. “It is possible and they may want to do it but I wouldn’t want it required.”
Council was supportive of both the deed restriction purchase program and the idea of a solar-powered Block 76.
And there’s more
Other parts of the five-year plan included an expedited BOZAR (Board of Zoning and Architectural Review) review process. Given the busy schedule of the BOZAR at the moment, the town has implemented a maximum of six BOZAR project reviews per month. Yerman is suggesting that two of those six spaces be reserved for projects containing affordable housing components. Other projects will be bumped down the schedule to accommodate such projects.
Yerman said having a minimum of $600,000 in reserves before embarking on major affordable housing construction projects was a good standard to have in the plan. He said it would take about two and a half years to build up those reserves, primarily through the vacation rental sales tax revenues. He said using the real estate transfer tax (RETT) as the town is doing this year is not a good long-term use of those funds.
He emphasized that as the Slate River annexation north of town comes online, the affordable housing potential there could be significant but it would be expensive, would take many years to finalize and would have to be a regional effort and not just a town initiative. “The future of affordable housing is regional,” he stated.
“Overall, I think looking at the five-year plan we can make great strides in affordable housing,” Yerman concluded.